I often hear that technology stocks are high-growth investments but pay low dividends or no dividends. They sit on tons of cash and search for the next big IT revolution. If they don’t do this, they could lose their current competitive advantage and disappear from the market within the next ten years. We have seen this formation process at Nokia (NOK) or Research In Motion (RIMM).
If you think longer about the requirements and risks of the sector, investors should rewarded by a higher return or discount in the stock price to increase the margin of safety. These are my favorites: Accenture (ACN), QUALCOMM (QCOM) and ARM Holdings (ARMH).